Or, did the parties to the structured settlement waive the anti-assignment provision?

Although IRC 5891 and state structured settlement protection acts set forth procedures and conditions allowing transfers of structured settlement payment rights, courts continue to enforce anti-assignment restrictions when parties to the original structured settlement object.

Most transfer courts, however, have held that the anti-assignment restrictions are not self-executing and have granted transfers when no one objects. Objections to transfers by obligors and annuity issuers have become increasingly rare since the enactment of IRC 5891 and the state protection acts.

The Brenston Case

Settlement Funding v. Cathy Brenston represents a high profile and controversial case where an Illinois Appellate Court overruled prior state court approval of structured settlement transfers based upon anti-assignment restrictions - even though the parties to the original structured settlement waived the anti-assignment provisions. The case currently is subject to a petition for review by the Illinois Supreme Court.

In the Brenston case, an Illinois 5th District panel, sitting for the 4th District Illinois Court of Appeals, determined Brenston’s settlement agreement contained an enforceable anti-assignment provision. As a result, the panel decided the state court, which had previously approved requested transfers, had a duty to enforce the anti-assignment provision and “it had no authority under the Act to approve” the transfer petitions.

In other words, despite the existence of the Illinois transfer statute, the Appellate panel declared court orders approving assignments to be "void ab initio", as a matter of Illinois law, whenever structured settlement documentation purports to limit assignability.

If the Illinois Supreme Court upholds the Brenston appellate decision, or decides not to review it, the case would render the Illinois transfer statute "a practical nullity", according to an Amicus curiae brief filed by the National Association of Settlement Purchasers (NASP).

"Without the certainty and finality of a court order, there is no viable secondary market,"the NASP brief states."Because every structured settlement contains boilerplate language that purports to limit or restrict assignability, every Illinois court approved transfer could be subject to challenge at any time."

Public Policy

The validity of assignments, including structured settlement transfers, depends in part on public policy issues. Transfers arguably undermine the fundamental purpose of structured settlements - to provide spendthrift protection for injury victims and their dependents.

This public policy perspective is captured in the statutory history of the structured settlement tax exclusion. To qualify, IRC 130 provides in part "periodic payments cannot be accelerated, deferred, increased, or decreased by the recipient of such payments"

Over time, many structured settlement documents have expanded this IRC 130 prohibition to include "transferred, assigned, mortgaged or encumbered" or words to that effect. (emphasis added). Although anti-assignment provisions are incorporated into many state workers compensation statutes, they are not specifically required by IRC 130, I04(a)(1) or 104(a)(2).

Factoring advocates offer competing public policy arguments to support structured settlement transfers. Unanticipated needs or poorly constructed settlement plans may necessitate immediate cash and outweigh other public policy considerations. Factoring advocates also criticize the "paternalistic" viewpoint of factoring opponents. They argue the structured settlement recipient, as owner of payment rights, should have the right to decide whether to transfer or assign those rights.

Many other statutes either permit or favor assignment of payments rights. These statutes include the 48 state structured settlement protection acts, IRC 5891, and recent revisions to UCC Article 9 as well as the Restatement (Second) of Contracts. Unfortunately, the authors of revised UCC Article 9 did not carefully consider the impact of their revisions on structured settlement transfers which has resulted in conflicting statutory language and interpretations among various states.

Best Practices

The National Structured Settlement Trade Association (NSSTA) amended its Model Qualified Assignment and Release Agreement following the enactment of IRC 5891 and the Model State Structured Settlement Protection Act. Paragraph 7, titled "Acceleration, Transfer of Payment Rights", now provides:

"None of the Periodic Payments and no rights to or interest in any of the Periodic Payments (all of the foregoing being hereinafter collectively referred to as “Payment Rights”) can be

i. Accelerated, deferred, increased or decreased by any recipient of any of the Periodic Payments; or

ii. Sold, assigned, pledged, hypothecated or otherwise transferred or encumbered, either directly or indirectly, unless such sale, assignment, pledge, hypothecation or other transfer or encumbrance (any such transaction being hereinafter referred to as a “Transfer”) has been approved in advance in a “Qualified Order” as defined in Section 5891(b)(2) of the Code (a “Qualified Order”) and otherwise complies with applicable state law, including without limitation any applicable state structured settlement protection statute.

No Claimant or Successor Payee shall have the power to effect any Transfer of Payment Rights except as provided in sub-paragraph (ii) above, and any other purported Transfer of Payment Rights shall be wholly void. If Payment Rights under this Agreement become the subject of a Transfer approved in accordance with sub-paragraph (ii) above the rights of any direct or indirect transferee of such Transfer shall be subject to the terms of this Agreement and any defense or claim in recoupment arising hereunder." (NSSTA's emphasis).

Brenston Status

Peachtree Settlement Funding, the transfer company involved in the Brenston case, has filed a petition for review with the Illinois Supreme Court. The Illinois Supreme Court will likely act on Peachtree's petition by December, although a decision whether to review could be delayed until February, according to NASP Executive Director Earl Nesbitt who reported on the case during the NASP 2013 Annual Conference. Assuming the petition for review is granted, Nesbitt stated a final decision is not expected for nine to 12 months.

Brenston Issues

NASP President Patricia LaBorde characterized the Brenston case as "troubling" for several reasons during a recent S2KM interview:

October 30, 2012

A Louisiana state court has ruled in Stone Street Capital v. McClendon that MetLife and Travelers had no right to withhold a structured settlement payment from Stone Street Capital
which Stone Street had previously purchased, with court approval
pursuant to the Louisiana structured settlement protection act, despite
the original annuitant/payee's death prior to the payment date.

This 2012 case, which was featured in a presentation by Earl Nesbitt at the NASP 2012 Annual Conference, reinforces the finality of settlement transfer orders. According to Nesbitt, it also calls into question other cases where Travelers,
as owner of structured settlement annuities, has ordered structured
settlement annuity issuers to stop making payments to transfer companies
following the death of the original annuitant/payees despite existing
court orders approving those transfers.

Background

In
1990, Shelia McClendon entered into a structured settlement in which
Travelers Insurance Company, as assignee, purchased an annuity from
Travelers Life and Annuity Company, which later became MetLife Annuity
Company of Connecticut in 2006.

On July 27, 2007, Shelia
McClendon entered into a purchase and sale agreement with Stone Street
Capital to sell her right to a $51,800.51 payment due October 15, 2010.

On
September 20, 2007 the same court which subsequently heard the Stone
Street v. McClendon case signed an order approving the transfer.

MetLife subsequently sent a letter
to Stone Street advising that MetLife would make the assigned payment to
Stone Street in compliance with the order.

The transfer order
provided an indemnity, allegedly requested by Travelers and MetLife, to
protect them from any further suit by any party asserting an ownership
claim or a right to the assigned payment.

Shelia McClendon died in 2008.

Pursuant to instructions from Travelers, MetLife did not pay Stone Street the October 15, 2010 payment when due.

Following
Stone Street's inquiry, MetLife and Travelers informed Stone Street
that other persons had competing demands for the October 15, 2010
payment and, to resolve the conflict, Stone Street must file a
declaratory judgment action which Stone Street did file.

On July 15, 2011, Travelers filed a preemptory exception of nonjoinder of indispensable parties.

Travelers'
exception claimed Shelia McClendon had passed away and that both her
estate and the estate of Peatrice Jackson, whom Travelers claimed was
the annuity beneficiary, were indispensable parties to Stone Street's
declaratory judgment lawsuit.

None
of the parties disputed, either at the time of the 2007 transfer
hearing or at the time of the subsequent declaratory judgment suit,
that Stone Street properly complied with Louisiana's structured
settlement protection act.

Stone Street's Argument

The
declaratory judgment action was filed against MetLife and Travelers and
also against the parties Travelers told Stone Street to file against.

Stone Street subsequently asserted, however, that MetLife was the only party against whom Stone Street needed a judgment in this lawsuit.

Although
some state structured settlement protection statutes require a change
of annuity beneficiary, the Louisiana statute does not because
beneficiaries are not required to receive notice or be named parties.

Louisiana law further holds:

Until a person dies that person has the right to sell assets that person owns.

Except
for irrevocable beneficiaries, no one has a vested right to the status
of a beneficiary under a life insurance contract if the death of the
insured has not occurred.

MetLife's Argument

Neither MetLife nor Travelers were parties to the 2007 transfer order so that order had no res judicata effect on MetLife.

Travelers, the annuity owner, told MetLife not to make the October 15, 2010 payment to Stone Street.

Nothing
in the 2007 transfer order addressed what would happen to the October
15, 2010 payment if Shelia McClendon died prior to that date.

When Shelia McClendon died, her named beneficiary in the annuity contract was Peatrice Jackson who predeceased McClendon.

Peatrice Jackson's heirs filed a competing claim for the October 15, 2010 payment.

Although
Stone Street alleges Shelia McClendon filed a request to change her
annuity beneficiary, neither MetLife nor Travelers had any record of
receiving this request.

Because a discrepancy existed among the documents submitted to MetLife, a concursus proceeding became necessary and appropriate.

June 13, 2011

One of three fundamental transitions reshaping the structured settlement industry is the change from a singular, illiquid and non-assignable product to multiple products with greater flexibility to address changing needs and circumstances of injury victims. This transition includes the potential of greater product liquidity for traditional structured settlements provided by IRC section 5891 and the state protection statutes.

During their 2011 annual meetings and educational conferences, both the Society of Settlement Planners (SSP) and the National Structured Settlement Trade Association (NSSTA) addressed this structured settlement industry transition.

How factoring companies are "adversely defining" the term "structured settlement" with aggressive television and internet advertising;

How structured settlement factoring cases have inundated many state court dockets; and

How NSSTA members should respond to plaintiff attorneys and judges who resist structured settlements because of proliferating factoring transactions.

The theme of NSSTA's "Judicial Perspective", as stated by participating Judge Denton, might have been: "don't presume that judges understand structured settlements". Previously a plaintiff attorney, Judge Denton claimed a familiarity with structured settlements but acknowledged he had never been asked to approve a structured settlement transfer application. Conversely, Judge Burke stated that his structured settlement experience was limited to reviewing and approving transfer applications.

Among his NSSTA comments, Judge Burke identified his "heroes" to include the superior court judges involved in the California Fresno County factoring cases. Judge Burke's judicial praise is both noteworthy and difficult to understand. In Henderson v. Scieteco (one of the Fresno County factoring cases) , a California appellate court subsequently reversed the entire consolidated order from the Fresno County Superior Court because of "multiple prejudicial errors in making its factual findings and in reaching legal conclusions" (emphasis added).

Also in Henderson v. Scieteco, the California appellate court held that public policy supports state court approved structured factoring transactions (emphasis added). NSSTA's Legal Committee representatives failed to mention this case when they discussed "public policy" and factoring during their structured settlement legal update.

Some judges not only understand structured settlements, but also have experience with both primary and secondary market structured settlement cases and publish local court rules for structured settlements. See, for example, Rule 68.2 and Rule 68.3 of the Local Rules for the Hamilton County, Ohio Probate Court.

SSP offered three presentations about non-traditional structured settlement products as part of its educational program segment titled "Practice Improvement: Marketing and New Products",

Prieto and Denehy introduced a product called "The Settlement Asset Management Trust (SAM trust) with Enhanced Structured Income (ESI)" which is essentially an irrevocable spendthrift trust generating level monthly income payments for durations of 10-30 years plus access to discretionary distributions.

The ESI component, according to Prieto and Denehy, consists of payment rights previously sold (i.e., transferred or factored) by a structured settlement recipient to a third party purchaser (factoring company) with an approved court order pursuant to a state protection statute. The SAM trust product managers purchase the payment rights from one or more factoring companies and transfer the payment rights to the SAM trust.

According to Prieto and Denehy, the resulting SAM trust can produce a taxable interest rate that is "typically three (3%) percent higher than comparable fixed products with similar guarantees and safety." Their explanation for the enhanced interest rate: the ESI does not have the same high internal costs as a typical annuity during the first few years of the annuity policy.

Although the flow of structured settlement payment rights purchased from various factoring companies is typically uneven, Prieto and Denehy maintain the SAM trustee can consolidate selected payment rights to create an even payment flow to the SAM trust beneficiary who might be an injury victim or a plaintiff attorney.

In addition to an interest rate risk, Prieto and Denehy acknowledge the ESI has an insurance company insolvency risk similar to a traditional structured settlement. According to Prieto and Denehy, however, a typical SAM trust will include between two and ten separate payment rights purchases thereby diversifying the insolvency risk.

Although some secondary market brokers and factoring companies have previously sold "re-cycled" structured settlement payment rights to individuals, Prieto and Denehy believe their product is different because the SAM trust integrates multiple streams of separate payment rights and also includes a cash allocation permitting discretionary distributions.

January 09, 2011

For the structured settlement industry to achieve its public policy and revenue potential, business standards and practices must improve. This blog post, which begins a new S2KM series, highlights historical developments which help define the business standards and practices of the current structured settlement industry.

NSSTA (1985) - A pioneering group of structured settlement agents and life companies formed the National Structured Settlement Trade Association (NSSTA) which became the first, and remains the largest, structured settlement professional association.

First Settlement Transfer (1986) - James Lokey completed the first transfer of structured settlement payment rights thereby launching the structured settlement secondary market. A number of companies subsequently responded to this market development to create a "gray market" allowing and encouraging structured settlement recipients to liquidate part or all of their future payment rights.

Revenue Procedure 93-34 (1993) - Regulations issued by the U.S. Treasury became effective defining a new type of IRC 468B fund ("Qualified Settlement Fund") providing an efficient dispute resolution technique for defendants and a safe harbor for plaintiffs who need time to resolve their own settlement planning issues prior to deciding upon any specific form of distribution including structured settlements.

NSSTA CSSC Program (1994) - NSSTA originated a training and certification program at the University of Notre Dame leading to a designation for qualifying persons as Certified Structured Settlement Consultants (CSSC).

Weil Settlement (1996) - The plaintiff in this lawsuit argued that, as a result of an anti-competitive conspiracy among certain structured settlement agents, annuity providers and NSSTA, structured settlement annuity providers marketed exclusively through agents who represented defendants and refused to appoint agents who represented plaintiffs or their attorneys. The confidential settlement of the Weil lawsuit coincided with a change in industry business practices whereby structured settlement annuity providers began to appoint agents representing plaintiffs and allowing agents representing defendants and plaintiffs to share commissions.

NASP (1996) - A group of companies specializing in structured settlement transfers created the National Association of Settlement Purchasers (NASP) which became the first and only trade association specializing in the structured settlement secondary market.

Structured Settlement Protection Statutes (1997-present) - Beginning with Illinois in 1997, nearly all states have enacted some form of structured settlement protection statute with many such statutes, since 2000, based upon the Model State Structured Settlement Protection Act which was also adopted by the National Conference of Insurance Legislators in 2004. These state laws require structured settlement transfers to receive advanced state court approval.

NSSTA Code of Ethics (1997) - NSSTA adopted and published its Statement of Ethics and Professional Responsibility "to provide guiding principles to its members and member organizations". Implicit in the acceptance of this Statement, according to NSSTA, "is an obligation to act in a professionally responsible and ethical manner when providing structured settlement services".

NY Attorney General Investigation (1999) - The New York Attorney General launched an investigation of J.G. Wentworth, a leading structured settlement transfer company, and entered into a settlement in 1999 limiting discounts on J.G. Wentworth's New York transactions to no more than 25%.

Victims of Terrorism Tax Relief Act of 2001 - Among other provisions, this legislation added IRC section 5891 ("Structured Settlement Factoring Transactions") to Subtitle E of the Internal Revenue Code and resulted from a political compromise between NSSTA and NASP.

SSP (2001) - Dissatisfied with what they considered NSSTA's continuing defense bias, a group of structured settlement agents formed the Society of Settlement Planners (SSP), a national non-profit education and public policy association for structured settlement professionals who advocate "the injury victim's right to choose settlement planning advisers and financial and guarantee providers".

Grillo case (2001) - A Texas district court entered a $1,600,000 judgment against plaintiff attorneys based upon allegations by their prior clients that a medical malpractice case settlement "contained no language which required at least one defendant or its liability insurer to promise a fixed and determinable periodic payment which would be tax free to the claimant".

California Attorney General's Study (2004) - Prepared for the California legislature, this study surveyed hundreds of California transfers between 2000 and 2003. For a summary of the results, see "Transfers of Structured Settlement Payment Rights - What Judges Should Know about Structured Settlement Protection Acts", by Daniel Hindert and Craig Ulman.

Saltzburg and Chemerinsky Opinion Letters (2006) - First presented at the ATLA 2006 Winter Meeting, two legal opinion letters written by law professors Stephen Saltzburg and Erwin Chemerinsky reach similar conclusions:

Experts, including structured settlement experts, have a fiduciary duty to their clients.

Plaintiff experts have a conflict of interest if they are paid by someone other than the plaintiff without disclosure to and consent by the plaintiff.

Plaintiff attorneys have a duty to disclose this conflict of interest by structured settlement experts to their clients.

Macomber v. Travelers (2007) - Settled on undisclosed terms, this class action lawsuit alleged that Travelers lowered the cost of structured settlements by 2% without informing plaintiffs (shortchanging) by paying its approved structured settlement agents a 2% commission and retaining a 2% commission for itself (rebating). Coincidental with this settlement, Travelers changed its structured settlement business practices and its affiliated life company stopped selling structured settlement annuities.

SSP RSP program (2007) - SSP launched a Registered Settlement Planner (RSP) professional certification program in affiliation with Texas Tech University including an educational component; submission and review of a comprehensive personal injury settlement plan; experience requirements; continuing education; and a code of ethics.

NSSTA Broker Relations Initiative (2007) - Consultant Lynn Courier introduced the first draft of a proposed "Standards of Professional Conduct" for structured settlement consultants developed by the NSSTA-sponsored Broker Relations Initiative (BRI) during the NSSTA 2007 Fall Meeting. To date, NSSTA has not adopted any additional standards of professional conduct beyond its 1997 Code of Ethics.

Rapid Settlements (2007) - Rapid Settlements, a Texas factoring company, failed in a series of transfer cases to successfully utilize arbitration clauses in its attempt to bypass state structured settlement protection statutes.

Fresno County Factoring Cases (2009) - In Henderson v. Scioteco, a California appellate court ruled favorably for 321 Henderson Receivables, a J.G. Wentworth affiliate, reversing earlier opinions of a California superior court in 11 factoring cases consolidated for appeal. The appellate court ruling allowed Henderson to amend the transfer petitions at issue to correct any errors prior to any new hearing on the petitions and additionally held that public policy supports state court approved structured factoring transactions.

Suitability in Annuity Transactions Model Regulation (2010) - The NAIC adopted this Model Regulation "to require insurers to establish a system to supervise recommendations and to set forth standards and procedures for recommendations to consumers that result in transaction involving annuity products so that the insurance needs and financial objectives of consumers at the time of the transaction are appropriately addressed." Significantly for structured settlements, exemptions from the Model Regulation include: "settlements of or assumptions of liabilities associated with personal injury litigation or any dispute or claim resolution process."

Spencer v. Hartford (2010) - A U.S. district judge in Connecticut approved a $72.5 million class action settlement resulting from plaintiff allegations (denied by Hartford) that Hartford and its attorneys, brokers and agents violated the Racketeer Influenced and Corrupt Organizations Act (RICO) and committed common law fraud in structuring its settlements. Hartford's affiliated life company stopped selling structured settlement annuities in 2009.

March 03, 2010

This S2KM blog post strategically analyzes the National Academy of Elder Law Attorneys (NAELA) 2010 Special Needs Summit from a structured settlement perspective. A prior S2KM post summarized
the NAELA Special Needs Summit. A subsequent S2KM post will
strategically analyze the NAELA Special Needs Summit from the
perspective of Internet-based knowledge management.

For related S2KM learning resources, see S2KM's public read-only wikis:

From a structured settlement perspective, the strategic business overlap with special needs attorneys encompasses disabled personal injury victims, their families and trial attorneys.
Various knowledge leaders, knowledge networks and communities of practice within this strategic business and public domain utilize
alternative terminology to describe their businesses without comparative analysis of the terminology itself. Here are some
recommended resources to help special needs attorneys understand this
growing legal market segment:

S2KM regularly attends and publishes reports summarizing and analyzing national educational conferences
sponsored by selected professional associations and universities whose
speakers and attendees participate within the strategic business overlap of
structured settlements and special needs law:

Why should special needs attorneys be interested in structured settlement law? This S2KM structured settlement diagram
summarizes a complex legal and financial transaction that requires
special needs legal knowledge, documentation and representation and
also presents business and career opportunities for special needs
attorneys:

Professional association meetings - S2KM will report structured settlement and settlement consulting educational results from four (4) professional association meetings during the first six (6) months of 2010:

Format: S2KM identified and submitted to NASP a preliminary list of strategic
structured settlement questions. NASP encouraged the panelists to identify and address
S2KM questions that most interested them. NASP allocated time for audience questions and participation.

Primary S2KM questions addressed by the NASP panel:

Which 2009 events and developments (legal; financial;
political) will most significantly impact the future of structured
settlements?

What are the best and worst structured settlement business practices?

Are factoring transactions good or bad for structured settlements?

Does public policy support state court ordered structured settlement factoring transactions?

How
has the financial crisis changed the structured settlement market?
Note: although NASP's strategic panel acknowledged the importance of
this issue, the panel also recognized the related comprehensive discussion by the NASP "Capital Markets" panel.

Spencer v. Hartford
- how the recent United States Second Circuit Court decision (denying
Hartford's appeal) impacts the Hartford class action lawsuit and which
other structured settlement programs are now at risk for
potential RICO class action lawsuits?

Revised California protection statute
- viewed by the panel as a legislative victory for the structured settlement industry and featuring
specific "best interest" criteria for state judges to consider in California settlement transfer cases.

Fresno County cases
- viewed by the panel as a judicial victory for the structured settlement industry
with an appellate court ruling that public policy supports state court
approved structured settlement factoring transactions.

Rapid Settlement cases
- viewed by the panel as a victory for the structured settlement industry with
continuing judicial denial of arbitration alternatives to state court
approved transfers pursuant to IRC 5891 and state structured settlement
protection statutes.

Scott Rothstein ponzi scheme - identified as a
legal and public relations reminder that all participants in settlements
featuring periodic payments with potential subsequent payment transfers
would benefit from applicable legislation (protection statutes) and required
state court approvals.

Best and worst business standards and practices - as identified and discussed by the NASP panel:

Is the secondary market good or bad for structured settlements? This question was discussed in detail during the NASP 2008 Annual Meeting
with Jack Meligan and Michael Upchurch providing a primary market
critique of the secondary market. NASP's 2009 Annual Meeting featured
two published critics of secondary market business behavior: Judge
Edward Burke of Arizona and attorney Daniel Hindert of Utah. In
addition, Michael Upchurch participated on the NASP strategic analysis
panel. If the NASP program reached any conclusion for this issue, it
was: the secondary structured settlement market is a reality. Whether
the secondary market is good or bad for structured settlements depends
upon business behavior and business results in both the primary and
secondary markets.

Does public policy support state court ordered structured settlement factoring transactions?
Jeremy Babener discussed the public policy arguments for and against
factoring transactions. Babener concluded that more information is
needed to make a comprehensive public policy declaration. The recent
California appellate court decision in Henderson v. Scioteco
holds that public policy supports state court approved factoring
transactions. Babener, acknowledged the importance of the decision, but
disagreed with the California court's characterization of IRC 5891 as
an "express sanction" of factoring. Richard Risk agreed with
Babener that IRC 5891 does not contain a clear statement of public
policy about factoring. Risk, however, pointed to examples of IRC 5891
legislative history that contradict any claim that public policy is
against structured settlement factoring. As one example, Risk cited the
Joint Committee on Taxation’s report released on March 18, 1999, “Tax Treatment of Structured Settlement Arrangements,” which Risk interprets as public policy support that structured settlements can co-exist with factoring.

S2KM applauds NASP for:

Focusing much of its 2009 educational program on strategic structured settlement industry issues; and also for

November 16, 2009

The purpose of this S2KM blog post is to summarize educational
discussions which occurred at the NASP 2009 Annual Meeting. In a prior
post (NASP 2009 Annual Meeting-1), S2KM listed the discussion topics, moderators, speakers and panelists and also identified Van Tran
as the winner of the NASP 2009 Alexander Hamilton award. In subsequent
blog posts, S2KM will provide analysis and feature interviews with
selected NASP educational program participants.

2009 Legislative Developments - Matthew Bracy summarized California Senate Bill 510
which Governor Arnold Swarzenegger signed into law October 11, 2009 and
which becomes effective January 1, 2010. Among changes to the
California structured settlement
protection statute, SB 510 adds factors for the court to consider when
determining whether a proposed transfer is fair, reasonable and in the
payee's best interest. These factors now include the reasonable
preference of the payee considering age and mental capacity. Bracy also
summarized the new North Dakota structured settlement protection
statute which generally follows the NCOIL Model Act. North Dakota
becomes the 47th state to enact structured settlement protection
legislation.

Legal Case Update - Tricia Laborde's legal case update focused primarily on the Fresno County cases and Rapid Settlement cases.
Among other holdings in Scioteco v. Henderson, a California appellate
court ruled that public policy supports state court approved structured settlement factoring transactions. In Allstate v. Rapid Settlements, which denied Rapid's appeal, U.S. Third Circuit Judge Joseph F. Weis, Jr. noted: "We
are one of the many courts to face Rapid Settlements' transparent
attempt to use this arbitration scheme to evade the legislatures'
intentions to protect the recipients of structured settlement payments".

What Happened in California? - A panel of legal and political
experts provided background and analysis of SB 510 and the Fresno
County cases. NASP lobbyist Carl London summarized the collaboration
between NASP and Consumer Attorneys of California (formerly the
California Trial Lawyers), plus the role of California legislator Van
Tran, in securing enactment of SB 510. Linda Morris, General Counsel
for J.G. Wentworth, provided background information and strategic
commentary about appellate decisions for the Fresno County cases which
she characterized as an important victory for the structured settlement industry.

Transactional Structured Settlement Issues - A panel of
attorneys discussed practical problems in securing judicial approval
for proposed structured settlement transfers. Some of the issues
discussed: difficulties in determining the domicile of transient
payees; privacy issues including the impact of Pennsylvania Rule 229.2;
difficulties in finding independent professional advisers; and what
happens when judges attempt to re-negotiate agreed upon transfers.

Structured Settlement Court Practices and Issues - Judges Edward
Burke of Arizona and Christopher Marshall of Oregon joined a panel of
attorneys in discussing settlement transfer court practices and issues
including: prior transfers by the same payee; the roles of transfer
attorneys and independent professional advisers; privacy concerns for
transferring payees; the advantages of utilizing a single state judge
for all transfer requests; plus other problems which cause continuing
judicial concerns about factoring and factoring companies.

Factoring and the Structured Settlement Tax Subsidy - Jeremy
Babener addressed the important role IRC 130 and 104 tax subsidies have
played in the growth of structured settlements. He summarized the
political and public policy attacks against, and defenses for,
structured settlement factoring transactions and questioned whether: